Aliko Dangote, Chairman of Dangote Group, has sounded the alarm on Nigeria’s fuel subsidy regime, emphasizing the urgent need for its abolition.
In an interview with Bloomberg TV on Monday, Dangote stressed that the government can no longer afford to sustain the subsidy, which is bleeding the country’s finances dry.
“The time is right to get rid of subsidies,” Dangote declared. “Subsidy is a very sensitive issue. Once you are subsidizing something, then people will bloat the price and then government will end up paying what they are not supposed to be paying.”
Dangote’s call to action comes on the heels of President Bola Tinubu’s inaugural speech in May 2023, where he announced the end of fuel subsidy. However, the subsequent increase in fuel prices sparked widespread protests, forcing the government to reinstate the subsidy temporarily.
But Dangote remains adamant that the subsidy must go. “Our price of gasoline is about 60 percent the price of our neighbouring countries, and we have porous borders, so it is not sustainable.”
He also pointed out that Nigeria’s fuel consumption is unclear, with estimates ranging from 60 million litres per day, making it difficult to determine the actual subsidy required.
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The billionaire businessman believes that his $20 billion refinery in Lagos can help alleviate the pressure on the naira. “Petroleum products consume about 40% of our foreign exchange,” Dangote noted. “But fuel from our refinery can actually stabilize the naira.”
As Nigeria grapples with the subsidy conundrum, critical questions arise:
– How will the government balance the need to end the subsidy with the potential backlash from Nigerians already struggling with rising fuel costs?
– What measures will be put in place to protect vulnerable populations from the inevitable price hikes?
– Can Dangote’s refinery truly make a significant impact on Nigeria’s fuel landscape and ease currency pressures?
The fate of Nigeria’s fuel subsidy hangs in the balance, with far-reaching implications for the country’s economy and its citizens. Will the government heed Dangote’s warning and take decisive action, or will the subsidy remain a perennial drain on Nigeria’s finances? Only time will tell.
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